California Minimum Wage Increase Becomes Law

Last week, Governor Jerry Brown signed Assembly Bill No. 10 amending the Labor Code to increase the minimum wage in California from $8.00 per hour to $10.00 per hour over the next three years.

Labor Code section 1182.12 now provides “on and after July 1, 2014, the minimum wage for all industries shall be not less than nine dollars ($9.00) per hour, and on and after January 1, 2016, the minimum wage for all industries shall be not less than ten dollars ($10.00) per hour.”

Proponents of AB 10 predict this two-step increase in the minimum wage will improve California’s economy by putting more money in hourly worker’s pockets, which will in turn promote additional consumer spending. Consensus data suggests the increase in minimum wage will effect 1.5 million full-time, year round workers in California.

Various employer and trade associations, as well as economists that opposed AB 10 fear that the 12.5% increase in minimum wage from $8.00 to $9.00 per hour in 2014 and subsequent 11% increase in January 2016 may have a negative impact on our local economy by raising the cost of doing business for employers that employ or rely on the minimum wage work force.